Submission on Canada’s Industrial Emissions Pricing

The Business Council of British Columbia (BCBC) welcomes the opportunity to comment on the federal government’s Discussion Paper: Driving Effective Carbon Markets in Canada.

Canada’s Industrial Output Based Pricing System (OBPS), introduced in 2019, was intended to establish a federal backstop price for large industrial emitters. The purpose was to reduce emissions while preventing the displacement of Canadian production and capital flight that would result in offshoring and potential increase of emissions elsewhere.

However, to date, Canada’s suite of domestic greenhouse gas (GHG) emissions management policies, including the OBPS, has struggled to achieve its stated emissions-reductions goals while undermining investor confidence. The increasingly tangled architecture of benchmarks, free allocations, credits, and discretionary adjustments have resulted in reduced foreign investment, delayed or cancelled capital projects, and the broad erosion of investor confidence. Demonstrably, business investment in Canada over the past decade has not even kept up with depreciation. This means as existing assets wear out, Canada’s capital stock per worker is shrinking, which contributes to the stagnation of Canadian living standards.